Making work pay!

Mark Wadsworth Thu Apr 24, 2008 at 04:43:03 PM GMT Print-friendly version Facebook

Ask your MP to sign Early Day Motion 1407, calling for the personal allowance for Income Tax and NIC to be increased to £10,000.

http://edmi.parliament.uk/EDMi/EDMDetails.aspx?EDMID=35657&SESSION=891





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Making work pay! | 16 comments (16 topical)

Re: Making work pay! (#1)

by rwendland on Thu Apr 24, 2008 at 04:58:53 PM GMT

... which would benefit those in the 40% tax band more than those earning less. (Unless the width of the 20% band was correspondingly reduced - but Bob Spink's EDM does not mention that. Actually the EDM calls for "to adopt the UKIP offical policy of a simple flat tax", so the 40% band would go as well.)


Re: Making work pay! (#2)

by alexhilton on Thu Apr 24, 2008 at 05:50:12 PM GMT

Mark, why do you oppose progressive taxation?


Re: Making work pay! (#4)

by Mark Wadsworth on Thu Apr 24, 2008 at 06:27:00 PM GMT

To raise a given amount in income tax, you can have a low rate and no personal allowance; a slightly higher rate and a small personal allowance; or a high rate and a high personal allowance. Once you chuck National Insurance (both employees' and employers') into the mix, what you find is that our tax system is pretty flat (40.7% for basic rate employees, 47% for higher rate). To cut a long story short, a high rate of tax and a high personal allowance will benefit lower earners most, it is simple maths. Another point to remember is that with a high personal allowance, the tax system is always progressive. If we go with flat rate 40%, somebody on £11,000 pays £400, that's less than 4% average. Somebody on a good salary (£40k) pays £12,000 = average rate 30% and a millionaire pays average rate 39.999%. How is that not progressive? Further, increasing the personal allowance is only half the battle. The other half is reducing the marginal withdrawal rate of benefits to ideally no higher than the normal tax rate, rather than having low- to average earners on tax credits facing a 70% marginal total withdrawal rate (33% tax plus NI and 37% tax credits withdrawal. If you want to sting the rich, Land Value Tax is the one to go for.


[ Parent ]

Re: Making work pay! (#8)

by rwendland on Thu Apr 24, 2008 at 07:11:12 PM GMT

Mark, any chance of a version of the Tax benefit model tables using your proposal, so we can see how it affects a range of families and individuals? I'm open-minded enough to take a look at the effects.

My main concern is that high marginal total withdrawal rate is the opposite side of the coin of focussing most help on those in greatest need. Lowering withdrawal rate means either much less help at the low end, or extending it a long way up the scale which is expensive. I'd like to see how your proposal pans out in the tables.

I do like the sound of Land Value Tax to make ends meet on tax & benefits.


[ Parent ]

Re: Making work pay! (#10)

by Mark Wadsworth on Thu Apr 24, 2008 at 07:56:36 PM GMT

Rwendland, the bigger picture (ignoring Employer's NI) which shows how to integrate the tax and benefit systems is presented by the politically scrupulously neutral Citizen's Income Trust (who glossed over higher rate tax) here:

 http://www.citizensincome.org/filelibrary/Citizen%27s%20Income%20booklet.pdf 


[ Parent ]

Re: Making work pay! (#11)

by Mark Wadsworth on Thu Apr 24, 2008 at 08:00:02 PM GMT

Alex, warming to my theme, I hope you realise that there is a raft of regressive tax breaks for higher earners for which there is no justification - EIS, VCT, Film Reliefs, but worst of all, higher rate tax relief for pension contributions - total cost = roughly the same as higher rate tax raises in the first place? Don't forget that it was a Labour government that increased the amount on which you can claim tax relief to £215,000? In other words, a very wealthy taxpayer gets as much tax relief in one year as a normal pensioner gets in state pension in a whole lifetime?

 


[ Parent ]

Re: Making work pay! (#3)

by madasafish on Thu Apr 24, 2008 at 06:13:57 PM GMT

Of course any thinking person would realise teh 10p tax problem could be removed at a stroke and very simply by:
raising perosnal tax allowances at the lower end.. thus reducing tax take.
lowering slightly on the higher tax bands to increase the tax take to fund the first.

But that's too simple for Gordon .


Re: Making work pay! (#5)

by Free Socialist on Thu Apr 24, 2008 at 06:28:28 PM GMT

Wadsworth, this isn't a Ukip forum. We're centre-left, not hard-right, in these parts.


Re: Making work pay! (#12)

by Mark Wadsworth on Thu Apr 24, 2008 at 08:02:42 PM GMT

On a tribal level. yes, I am on the wrong blog. But I always ask myself "Does this policy help low- to average earners?" If yes, then it must be worth looking at.


[ Parent ]

Re: Making work pay! (#6)

by madasafish on Thu Apr 24, 2008 at 06:32:37 PM GMT

Well the 10p tax rate issue is doing Ratings a lot of good..

http://blogs.telegraph.co.uk/politics/threelinewhip/april08/toriestriumphpoll.htm


Re: Making work pay! (#7)

by NorthernMonkey on Thu Apr 24, 2008 at 07:03:58 PM GMT

I'd happily agree to raising the threshold to £10,000 but I could never support a flat tax on top of that. And if you did raise the threshold by that much, you'd have to raise taxes on higher earners to replace the loss in revenue.


Re: Making work pay! (#9)

by Mark Wadsworth on Thu Apr 24, 2008 at 07:53:24 PM GMT

By all means call for an increase in the tax rate above the threshold. Brother Neil Harding reckoned that a flat tax rate of 40% would be about right (and his maths seems to stack up).

http://brightonregencylabourparty.blogspot.com/2005/08/citizens-income-ci.html 

 

 


[ Parent ]

Re: Making work pay! (#13)

by madasafish on Thu Apr 24, 2008 at 08:12:06 PM GMT

Who said anything about flat rates? Just reduce the threshold at which 40% tax starts...


And by all means reduce tax allowances on pensions... that means no-one would save for retirement in the UK so the state would have to AND where do you think pension fuunds invest? Outer Mongolia?



And yes remove tax allowances on films: say goodbye to the UK film industry.

And so on.

The world is a competitive place.. whether you like it or not. Overtax here and businesses will move elsewhere.. Shire have done it. Others will follow.

If Gordon stopped wasting money.. the Olympics.. and the NHS IT system £15 billion and it does not work... and ID cards ..

But hey lets just spend money like there is an inexhaustible supply.

Well i have news.. voters get fed up with waste and broken promises and lies.



[ Parent ]

Re: Making work pay! (#14)

by Mark Wadsworth on Thu Apr 24, 2008 at 09:18:21 PM GMT

It's funny you should mention Shire, I've covered all that in the context of my overall reforms here:

http://markwadsworth.blogspot.com/2008/04/shire-pharmaceuticals-relocates-to.html 

 As to old age pensions, I've covered that here:http://markwadsworth.blogspot.com/2007/12/pensions-blow-for-stay-at-home-mothers.html 


[ Parent ]

Re: Making work pay! (#15)

by Free Socialist on Fri Apr 25, 2008 at 01:01:16 AM GMT

Citizen's income, could it be made viable? I'm vaguely interested in exploring the concept.


[ Parent ]

Re: joined up thinking (#16)

by williamcobbett on Sat Apr 26, 2008 at 01:08:28 AM GMT

labour introduced the minimum wage because people need a decent wage to live off. as the minimum wage gives you an income of around £11,000 if you work full time, how can it make sense that the government starts taxing you on £5,200 and above. labour should be raising the bands for 0%, 20 % and 40% and thinking about introducing a 50% one for really high earnings/incomes/profits/capital gains.


Making work pay! | 16 comments (16 topical)